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CIRCULAR

Amending and supplementing the Finance Ministry's Circular no. 108/2003/TT-BTC of November 7, 2003, which guides financial mechanisms applicable to official assistance development (oda)-funded projects on treatment of urban daily-life garbage and solid waste

Pursuant to the Government's Decree No. 60/2003/ND-CP of June 6, 2003, detailing and guiding the implementation of the State Budget Law;

Pursuant to the Government's Decree No. 134/2005/ND-CP of November 1, 2005, promulgating the Regulation on management of foreign loans and payment of foreign debts;

Pursuant to the Government's Decree No. 131/2006/ND-CP of November 9, 2006, promulgating the Regulation on management and use of official development assistance (ODA);

Pursuant to the Government's Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

In furtherance of the Prime Minister's Official Letter No. 253/TTg-QHQT of February 22, 2007, additionally approving financial mechanisms applicable to ODA loan-funded projects on treatment of urban daily-life garbage and solid waste;

The Ministry of Finance guides amendments and supplements to financial mechanisms applicable to projects on treatment of urban daily-life garbage and solid waste specified in the Finance Ministry's Circular No. 108/2003/TT-BTC of November 7, 2003 (Circular No. 108), as follows:

1. To amend and supplement Point 2, Section B, Part I of Circular No. 108 as follows:

"2. Financial mechanisms applicable to ODA loan-funded projects on treatment of urban daily-life garbage and solid waste:

2.1. Proportions of allocated/re-lent ODA loans:

a/ The proportion of central budget allocations (to the total ODA loan for each project or project component on treatment of urban daily-life garbage and solid waste) shall be determined according to urban center grades of localities and scales of investment (capacity of treatment factories) in the Table below:

Urban center grade

Scale of investment (ton/day)

Proportion of allocated ODA loan (%)

Proportion of re-lent ODA loan (remaining %)

Special grade or grade I

On demand

50

50

Grade II

Up to 200

60

40

Grade III

Up to 150

70

30

Grade IV

Up to 100

80

20

Grade V

Up to 70

90

10

b/ Principles of determining and applying the aforesaid proportions:

- Scale of investment mentioned in the Table above is the maximum scale of investment determined suitable to each urban center grade as a basis for determination of the proportion of allocated/re-lent ODA loan for each program or project.

For provincial/municipal People's Committees that wish to make investment with a scale larger than the maximum scale of investment suitable to the corresponding urban grade mentioned in the Table above, in order to comply with local future urban development plannings and plans, the proportions of central budget allocations shall also be applied according to urban center grades with similar scales of investment.

Example: Town A of province X is a grade-IV urban center but wishes to invest in a daily-life garbage treatment factory with a capacity of 150 tons/day (equivalent to the maximum scale of investment for a grade-III urban center). In this case, the central budget covers only 70% of allocations, while the project owner must re-borrow 30% from ODA loans for investment in the factory under the re-lending conditions specified at Point 2.2 below.

The proportions of allocated/re-lent ODA loan mentioned in the Table above do not apply to investment projects in inter-urban center, inter-regional or inter-provincial daily-life garbage and solid waste treatment zones. The Ministry of Finance shall coordinate with concerned agencies in considering the proportions of allocated/re-lent ODA loan for each of those projects and submit it to the Prime Minister for decision.

2.2. Re-lending conditions on re-lent ODA loans:

a/ Re-lending conditions strictly comply with general principles of the Government's Regulation on re-lending foreign loans and aid and are specified as follows:

- Currency used in re-lending is Vietnam dong. The re-lent value in Vietnam dong shall be determined according to the foreign currency value upon each time of capital withdrawal and converted into Vietnam dong at the foreign exchange rate publicized monthly by the Ministry of Finance on its website (http://www.mof.gov.vn).

- The re-lending interest rate of 3% per year shall be applied. This rate already covers the re-lender's re-lending service charge. The payment of re-lending service charges complies with the Government's Regulation on re-lending foreign loans and aid.

- The re-lending term (including the grace period) shall be determined by the Ministry of Finance suitable to the capital recovery term indicated in the investment report of an approved project or according to the re-lender's reevaluation results, which, however, must not exceed 20 years.

The grace period shall be determined by the Ministry of Finance based on the period from the time of construction to the time a project is completed and put into operation indicated in the investment report of the approved project, or according to the re-lender's reevaluation results, which, however, must not exceed five years.

The grace period and the capital recovery term are counted from the first date the project/project component's capital is withdrawn (unless otherwise agreed with a foreign donor).

- Interest incurred in the grace period may be paid according to annual debt payment periods or incorporated into the principal and paid in the principal-debt payment term (to be agreed and decided by the re-lender and project owner).

- (Principal and interest) debt payment period: six months.

b/ For projects serving urban centers located in mountainous, highland, deep-lying, remote areas and islands, if these urban centers are classified according to urban-center classification criteria applicable in special cases as specified at Point 1, Article 14 of the Government's Decree No. 72/2001/ND-CP of October 5, 2001, they are also entitled to the following re-lending conditions:

- The maximum re-lending term is 20 years, including a five-year grace period.

- Re-lending interest in the grace period: Interest in the first two years may be paid later together with interest of three subsequent years.

- Other re-lending conditions comply with the provisions of Point 2.2.a above."

2. Projects on treatment of urban daily-life garbage and solid waste are not governed by the provisions on currency used in re-lending at Point 5, Section B, Part I of Circular No. 108, but by the provisions on currency used in re-lending at Point 1 of this Circular.

3. Organization of implementation:

The provisions on domestic financial mechanisms in Sections 1 and 2 of this Circular apply from the effective date of this Circular to new projects which are being or have officially been registered into the list of ODA-calling projects but their applicable financial mechanisms have not yet been approved by the Prime Minister. For projects with financial mechanisms already approved before the date this Circular takes effect, the approved financial mechanisms still apply.

This Circular takes effect 15 days after its publication in "CONG BAO." Other provisions of the Finance Ministry's Circular No. 108/2003/TT-BTC of November 7, 2003, guiding financial mechanisms applicable to ODA-funded environmental sanitation projects, remain effective.

Problems arising in the course of implementation of this Circular should be promptly reported to the Ministry of Finance for study and appropriate amendment or supplementation.